From The Zimbabwe Independent, 27 June

Govt turns to France for fuel

Dumisani Muleya

Government has turned to the French oil giant TotalFinaElf to stem the deepening fuel crisis as the country lurches towards the most critical shortage yet, it has emerged. Official sources said yesterday government was seeking a deal with TotalFinaElf to supply the country with 35% of its fuel needs. This emerged as President Robert Mugabe this week renewed his hunt for fuel in Libya. Mugabe, who last year said the fuel problem was giving him "headaches and stomach pains", left for Tripoli on Wednesday in a bid to resuscitate the frozen US$360 million fuel deal with Libya's Tamoil, first signed two years ago. The deal has been on ice because Zimbabwe is unable to pay. Sources said Mugabe was likely to return from Libya empty-handed unless he mortgages what his government has classified as "strategic assets" as part of the deal. Tamoil has been demanding specific assets before it agrees to revive the arrangement that guarantees Zimbabwe a year's supply of fuel. The Libyans, who last visited Zimbabwe in May in connection with the fuel wrangle, want to acquire Noczim's 50% equity in Petrozim, which it jointly owns with Lonrho. Noczim is asking US$100 million while the Libyans are prepared to pay only US$48 million. Tamoil, which is owed over US$60 million by government, also wants to acquire vital fuel infrastructure before any deal is done. They want to buy the Mutare-Harare pipeline and Msasa depot and acquire service stations as part of the arrangement. The government is reluctant to release the assets because of the deadlock over the price. Before Mugabe left for Libya with a large delegation of government officials, bankers and fuel sector representatives, a meeting was held by stakeholders on Monday at the Jewel Bank's executive chambers. Sources said the asset-mortgaging issue loomed large at the meeting. Efforts to get comment from Jewel Bank chief executive Gideon Gono yesterday were unsuccessful as he was said to be in Libya.

Sources said government is now hoping against hope that TotalFinaElf will help it out of the crisis that has been lingering since 1999. "We understand government has been in touch with TotalFinaElf for a fuel supply deal," an industry source said. "It appears there has been a gentleman's agreement on the issue although there are still things that need to be sorted out first." Stanislas Mittelman, TotalFinaElf Zimbabwe chief executive, and the company's marketing and public affairs director Stanley Hatendi were not available for comment yesterday. The TotalFinaElf group is currently developing a US$3,4 billion oil project in Angola. Angola's state-owned Sonangol, the concessionaire, recently authorised TotalFinaElf to tender key contracts for the development of the Dalia oil field, which includes 34 production wells, 30 water injection wells and three gas injection wells. The multinational has already launched the project capable of processing 240 000 barrels of oil per day. The Dalia floating production storage and offloading facility will have a storage capacity of two million barrels of oil. Government has been trying to entice TotalFinaElf, which is partly Belgian-owned, to enter into a deal. It has sold the company the country's largest storage facilities at Beitbridge. Now the government is in the process of selling its 51% stake in the vital Oil Blending Enterprises Ltd (Obel) which supplies lubricants. Total already controls 49% of Obel. Zimbabwe has been trying to source fuel from Angola for some time now. Angola, the second largest oil producer in sub-Saharan Africa after Nigeria, is pumping 760 000 barrels a day from its vast offshore oil fields. The government has also been trying to secure fuel from Kuwait, United Arab Emirates, Sudan, Iran, South Africa, Botswana, and Nigeria.